The head of the disability service under government inquiry was severely criticised for her care of the mentally ill 18 years ago - including putting activist Titewhai Harawira in charge of a group of Maori psychiatric patients.

Anne Murphy, clinical director of Focus 2000, was made redundant as assistant general manager of the Auckland Hospital Board in December 1988 after an inquiry into mental health services.

Health Minister Pete Hodgson last night refused to comment on Mrs Murphy's background but said new information had been passed on to the Ministry of Health and officials were seeking a new meeting with her organisation.

Mrs Murphy, the Auckland Health Board's senior medical officer, Dr Leslie Honeyman, and chief executive Ian Campbell were singled out for their actions during the closure of Carrington Hospital in the 1980s. The 1988 Mason report into mental health services held the executive group "collectively responsible" for "ethically unacceptable" decisions which resulted in "huge human cost". The report found that the blame for a lack of care for psychiatrically disturbed people lay with the health service.

Last night Mrs Murphy said: "I'm still prepared to stand up and say what I did then [was right] and I will to my dying day. I believe we were correct in what we did."

She also said she believed her exit from the board and the issues around it had no relevance to the position she took at the Cerebral Palsy Society of New Zealand in August 1989 and later Focus 2000, the company formed to handle residential services for disabled people previously kept in institutions.

Mrs Murphy's exit from the hospital board came at a time when mentally ill patients were being released into the community as part of a process which saw institutions closed.

Among the problems was a unit known as M3, which was closed.

Following staff departures, the board was left with about 30 male psychiatric patients.

At the time, Mrs Murphy told NZ Herald journalist Carroll du Chateau, then at Metro magazine, that she sought help from a veteran Maori activist.

"We went down to the whare hui and I said to Titewhai 'I've got a whole pile of Maori men down here and I don't know what to do'."

Mrs Harawira hired family members and other unqualified staff and there were dozens of allegations that staff were allowed to beat patients.

In one case a patient was beaten so badly his skull was fractured.

In other parts of the institution, psychotic patients were turned away, patients and nurses smoked marijuana and two staff members set up a blue movie and sauna business in the basement.

Mrs Murphy last night again refuted claims that two Focus 2000 clients choked to death while in a home with no caregivers. She said the claims had no foundation.

Former board member Bob Atkinson told the Herald on Sunday he was prepared to give the names of the two people to Ministry of Health investigators.

National health spokesman Tony Ryall said he wanted a full Audit Office inquiry into Ministry of Health contracts with service providers.

"I don't think Pete Hodgson should let the ministry investigate themselves."

A statement from Focus 2000 yesterday stated that the board was confident in its performance.

The statement quoted chairman Walt Beanland, and stated that reports last week of a $2.5 million accounting error by Focus 2000 had been resolved 15 months ago and the money had been paid.

"Since then the company has continued to be a leading provider in the disability sector recognised for its quality care."